The United States has named India, Pakistan Afghanistan and Myanmar among 20 major hubs for trafficking or growth of illegal drugs in an annual government report.
However, the report included India among "certain countries where exceptional factors are at play" noting it has an "exemplary record" on controlling legal opium production, with licensed farmers now being issued with "smart cards" to enable the government to keep a better track of cultivation.
But Indian officials have uncovered "surprisingly large illicit cultivation" in areas where the problem was thought to be a thing of the past, Christy McCampbell, deputy assistant secretary for international narcotics at the State department, told reporters explaining how New Delhi got on the majors list.
"The reason that India is on the majors list is they do have a large problem of diversion of chemicals there and of opium production. Because of the diversion from their licit opium that they do grow, it's finding its way to the illicit market, and as much as 30 percent of their opium is being diverted that we believe.
"And so that is why I guess you could consider that both a transit and a producing country because of the opium that is going into the diverted markets," she said.
Among the 20 listed only Myanmar and Venezuela were said to have "failed demonstrably" to tackle the problem over the past 12 months, opening the way to withdrawal of certain US aid.
But President George Bush issued a waiver against pulling further aid from Venezuela, arguing that supporting "democratic institutions" pitted against President Hugo Chavez was "vital to the national interests of the United States".
The major US focus on drug eradication is in Afghanistan and partially Pakistan, "but mostly Afghanistan is where our funds are going and where our efforts are, because that's the country or the state that grows the poppy for opium", McCampbell said.
"India produces significant amounts of opium poppy for legitimate pharmaceutical purposes. Although it maintains tight controls on the industry to deter the diversion of the legal narcotics and raw materials to illegal markets, the potential diversion of this crop for illicit purposes is a continuing concern to the United States," she added.
"Recently, Indian law enforcement officials discovered and destroyed very large fields of poppy grown in areas where before, we thought there was no illicit cultivation. We encourage very much the Indian officials to investigate this matter and to prosecute those behind this surprisingly large and disquieting find," McCampbell said.
Other countries included in the majors list for the last two years are: Bahamas, Bolivia, Brazil, Colombia, the Dominican Republic, Ecuador, Guatemala, Haiti, Jamaica, Laos, Mexico, Nigeria, Panama, Paraguay, Peru and Venezuela.